IRS Depreciation Rules for Security Deposits
Landlords cannot charge you for the full replacement cost of items that have already been used for years. Learn how depreciation protects tenants from unfair deductions.
What is Depreciation?
Depreciation is the decrease in value of an item over time due to age, wear, and obsolescence. The IRS publishes guidelines (Publication 527) that establish the "useful life" of various items in rental properties.
Key Principle
If an item has reached the end of its useful life, its value is $0. The landlord cannot charge you anything for it, even if you damaged it.
Why Depreciation Matters for Your Deposit
Many landlords try to charge tenants the full replacement cost of items like carpet, paint, or appliances. However, if these items were already old when you moved in, they have little to no remaining value.
Example: Carpet Depreciation
Scenario:
- Carpet was 4 years old when you moved in
- You lived there for 3 years
- Carpet is now 7 years old
- Carpet useful life: 5-7 years
Result:
The carpet has reached the end of its useful life. Even if you stained it, your landlord cannot charge you for replacement because the carpet was already fully depreciated.
Standard Useful Life Guidelines
The following table shows typical useful life spans based on IRS Publication 527 and industry standards:
| Item | Useful Life | Notes |
|---|---|---|
| Carpet | 5-7 years | Higher quality = longer life |
| Interior Paint | 3-5 years | Depends on quality/traffic |
| Appliances | 10-15 years | Refrigerator, stove, dishwasher |
| HVAC Systems | 15-20 years | Furnace, AC units |
| Water Heater | 10-12 years | Tank-style |
| Window Blinds | 5-7 years | Mini blinds, verticals |
| Drapes/Curtains | 5-7 years | Fabric window treatments |
| Vinyl Flooring | 10-15 years | Sheet vinyl, LVP |
| Hardwood Floors | 25+ years | With proper maintenance |
| Light Fixtures | 10 years | Standard fixtures |
| Faucets | 15-20 years | Kitchen and bathroom |
| Toilet | 25+ years | Porcelain fixtures |
How to Calculate Depreciated Value
Use this formula to calculate the remaining value of an item:
Remaining Value = Original Cost × (Remaining Life / Total Life)
Where Remaining Life = Total Useful Life - Age at Move-Out
Calculation Example
Paint Deduction Disputed:
- Landlord charges: $800 for repainting
- Paint age when you moved in: 2 years
- Your tenancy: 3 years
- Current paint age: 5 years
- Paint useful life: 5 years
Calculation:
Remaining Life = 5 years - 5 years = 0 years
Remaining Value = $800 × (0 / 5) = $0
The paint was fully depreciated. You owe nothing for repainting.
How to Challenge Improper Deductions
- Document the age: Get move-in inspection reports, photos, or receipts showing when items were installed.
- Calculate depreciation: Use our free Deduction Checker to automatically calculate the depreciated value.
- Write a demand letter: Cite the IRS depreciation guidelines and demand a refund of the overcharged amount.
- File in small claims: If the landlord refuses, bring your calculations to court. Judges understand depreciation.
State-Specific Rules
Some states have specific requirements about depreciation:
- California: Courts consistently apply depreciation. Landlords cannot charge for items past their useful life.
- Texas: The 3x penalty for wrongful withholding applies to amounts that should have been depreciated.
- Washington: If landlords fail to provide proper documentation, depreciation arguments are strengthened.
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